Saw this one on a scanner - seems to be popping up a bit -
Seems to be popping on news " All Blue Capital in $773 mln bid for Zymeworks"
Snippet of article - “In a regulatory filing late on Thursday, All Blue said it had made a non-binding offer for $10.50 per share in cash, which represents a 116% premium to Wednesday’s closing price of $4.86.”
Part 2 - “There is no certainty that Zymeworks, which carries roughly $65 million of debt, will negotiate a deal, people familiar with the matter said. The company unsuccessfully engaged with potential buyers last year, the sources added, requesting anonymity.”
I’ve pretty much only lost money on biotech and pharma stocks, can someone explain to me why this would warrant that type of buyout? Articles even say the buyout will be rejected as they are targeting a $18/share price target.
SVB Securities analysts suggested a higher bid will be needed. “We believe that the board is likely to reject this initial offer, but it is possible a higher price could materialize through negotiation or a bidding process. In our view, we think this offer is largely opportunistic and the company should sell for a premium to our $18 PT,” the analysts wrote in a note to investors.
Based on their cash flow, this company should need to take on additional debt or issue shares again to raise capital. What is the catalyst that is going to make the a billion dollar company?
Oh we all have - in this case I think the play is to buy and sell the momentum -
As why they are worth so much, or why they believe they are - I don’t know but I guess the company who made the offer sees the value. I don’t really know much about Biotech and pharma hence just treating shares as scalps and leaps as lotto’s, they have earnings coming soon and who knows maybe the bid is retracted due to some new information. - if it does turn out my shares could of been worth so much more it is ok - all comes down to opportunity costs.
Snippet “May 3 (Reuters) - Investment firm All Blue Capital would be advised by Alan Barge, former oncology head at British drugmaker AstraZeneca Plc, in its bid to acquire drug developer Zymeworks Inc, according to a press statement seen by Reuters.”
I have been watching this for the last few days. Any potential positive catalyst for this stock is relatively speculative and meaningless at this point, regarding buyout talks. Coupled with the bearish news we are seeing about their financials
"As previously disclosed, Zymeworks announced and implemented the Restructuring with the target of reducing employee headcount by at least 25% across the organization by the end of 2022. Costs under the Restructuring are expected to range from a cost of $0.5 million to a benefit of $3.5 million, and consist primarily of: •Employee severance and termination benefits of approximately $5.0 million
•An offsetting non-cash benefit related to the reversal of previously recognized stock-based compensation expenses for unvested stock and restricted share unit awards of $10.5 million"
…I am l hesitent to take any large position until something shakes out. That said, I can see it popping off of news and will set some limit buys for leaps. Given their restructuring and with earnings tomorrow, maybe short term puts is the play here.
As of March 31, 2022, Zymeworks had $300.5 million in cash resources consisting of cash, cash equivalents and short-term investments.
So far in AH - not any major movement either way. Will be watching for a few days to see if there is any new news on the offer front. Should I see the opportunity on the leaps to exit + 20% or so I will take it
I do think with the SPY momentum it could pull them up - rising tides raises all ships and such.
